Because a home purchase is often the largest single investment an individual will ever make, mistakes made at this stage can radiate through his or her life for decades to come. Fortunately, common real estate buying mistakes are well-known, and those wishing to avoid becoming victims of these common pitfalls can learn what they are before making their home purchases.
You Set the Budget, Not Your Lender
Unless you are paying for your new home in cash, you will rely on a lender to finance the deal. When getting pre-approved for a purchase, your lender will look at your finances and tell you how much money they can lend to you. It is easy to interpret this figure as “how much home you can afford,” but this is a mistake. Keeping his or her commission in mind, the lender wants to lend you as much money as possible for a mortgage, so long as you can repay it. However, you want as much home as you can afford while still being able to have an emergency fund, invest money into your retirement, and maintain your everyday lifestyle. So, only choose a home that is well within your housing budget.
Do Not Pay the Minimum Down Payment
There are some lending programs that let you buy with as little as 3% down, but, in these cases, you probably should not be buying a house at all. 20% is the accepted percentage that will give you security going forward.
Do Not Automatically Go with the 30-Year Mortgage
A 30-year mortgage will indeed give you the lowest monthly payment, but it will also extend the timeframe for which you will be paying for your home. Additionally, due to the additional interest, a 30-year mortgage will be thousands of dollars more expensive than a 15-year loan.
There are many other mistakes that a homebuyer can make, but three of the most common ones are mentioned above. Along with these, consider using innovative real estate transaction platform Propy to help mitigate homebuying costs, security problems, and delays on real estate transactions. A well-considered home purchase can pay you back several times over for the rest of your life. So, prepare yourself properly before you buy, and enjoy the benefits for years to come.